inRoads Research: Industry Spotlight, Information

June 24, 2016

ADP Announcement to Bring Dramatic Surge in Data Processing Jobs

Since March 15, when news broke that Automatic Data Processing, Inc. (ADP) plans to create 1,800 jobs in Hampton Roads, many have been abuzz with speculation about this announcement’s economic impact. The HR software/Data Processing giant’s arrival has been met with much political fanfare, but for an accurate picture of what it will do for the region, one must look at historical data, before diving into the industry with an indepth analysis of the information sector.

Before the recession, Hampton Roads’ data processing industry had relatively high growth averaging at 9% annualized growth from 2000-2006, dwarfing the national average of -2% within the same interval. While Hampton Roads has had a hard time catching up to those pre-recession growth numbers, ADP’s hiring schedule projects a bright outlook for the region's data processing industry. The planned addition of 300 new employees in 2016 and another 1500 by 2018, (assuming all other companies in the industry remain constant), pushes Hampton Roads’ data processing employment to 3,400 jobs. This is a stark return to form of pre-recessionary growth, as well as the largest volume of data processing jobs ever recorded for the region, and more than doubles current employment numbers.

Industry Spotlight: Information

The United States Bureau of Labor Statistics (BLS) and the North American Industry Classification System (NAICS) describe the Information Sector (NAICS 51) as a group of establishments who are primarily involved with three major processes. These processes include: 1) producing and distributing information and cultural products, 2) providing the means to distribute those products as well as data or communications, and 3) processing data.

Within Hampton Roads, employment in the Information Sector came in just shy of 11,000; 10,600 as reported by the Bureau of Labor Statistics in April 2016. While not currently a major employment sector in our regional economy (holding only 1.4% of total nonfarm payroll employment), there are a variety of resources working to expand and embrace this regional industry.

The pie chart below highlights the various subsectors and displays their share of NAICS 51 employment within Hampton Roads. As we can see, in 2015 the Broadcasting Industry held the largest share of employment, employing 3,560 or 33% of the Information Sector. This is followed by the Telecommunications Industry which held a 20% share with 2,150 employees. Publishing industries and Data Processing industries fell shortly after holding 16% and 15% respectfully.

Data Processing, Hosting and Related Services

One variable that will serve as a catalyst to enhance the Information Sector within Hampton Roads will occur through the materialization of the aforementioned March 2016 business announcement from ADP. ADP operates as a comprehensive global provider of cloud-based human capital management solutions and business process outsourcing services, analytics, and compliance expertise. As reported by Hoover’s, a national leader for proprietary business information, ADP is classified as having a primary 3-digit NAICS code of 518.

This spring, ADP announced their plans to invest over $32 million to establish a regional customer service center in Norfolk, Virginia. This announcement is expected to create 1,800 new jobs; with an additional 1,700 generated through indirect and induced regional multiplier effects. Once all jobs are in place, Hampton Roads can expect to incur an annual impact of over $158 million in regional earnings. As it progresses, this announcement will have significant ripple effects and will further strengthen the capabilities of the information sector within Hampton Roads. Upon reaching full employment, the Data Processing Industry will employ approximately 3,400 residents. All else equal, this would effectively shift their share of employment within NAICS 51 from 15% to 27%, a significant increase in market share. For these reasons, inRoads Research highlights the Data Processing, Hosting, & Related Services Industry within Hampton Roads.

The process of deconstructing an industry can lead to valuable insights within the economic and workforce development arena. One aspect of industry deconstruction that serves as a valuable tool is the examination of the variety of occupations found within that particular industry. As it turns out, the top five most common occupations within the data processing industry account for 36% of the total jobs within the industry and 70% of the top ten. These occupations include: Customer Service Representatives, Computer Systems Analysts, Computer User Support Specialists, Software Developers of Applications, and Software Developers of Systems Software.

As one can imagine, there are an array of occupations within the Data Processing Industry. Many of which do not hold a full percentage of total jobs. To minimalize clutter, the pie chart below highlights the top ten most common occupations within the Data Processing Industry and shows their respective share of employment within the group. For illustrative purposes, highlighted are the previously stated top five most common occupations as well as greyed occupations six through ten.

Other variables to consider when analyzing industry occupations include: occupation specific wages, typical entry level education requirements, skill sets needed, and in this scenario, the concentration of employment held by the workforce ages 25-34. This information can be accessed by interacting with the Tableau workbook below. Begin by hovering over the individual columns within the graph, as you do, the specific variables described will be highlighted.

Furthermore, if you click on a particular occupation, a temperature diverging color index will draw out the most important skill sets needed to be successful within the occupation; where dark red represents a skill set of high importance and light blue represents skills that may not necessarily be applicable to that particular occupation.

As you become comfortable interacting with the workbook, filter by typical entry level education requirements. To do so, click the drop down box titled ‘Typical Entry Level Education’ and select the desired level(s). Additionally, slide the ‘Median Hourly Wage’ bar to higher or lower dollar amounts. This will draw out occupations within the Data Processing Industry that pay more or less than the regional median of $17.13.

It is important to note that the numbers associated with the common occupations are regional totals and do not solely describe the Data Processing Industry. The occupations have been featured this way to illustrate the available labor force within Hampton Roads. Additionally, to highlight the regional workforce ages 25-34, the bar graph is sorted by degree of concentration.